If your company is unable to pay HMRC or a creditor then it will be better to address the problem with them rather than leave them to discover the truth for themselves.
Notifying them of your inability to pay a debt and keeping them up to date is an important step to take.
We can assist you in doing so by formulating an achievable and realistic plan to present to creditors.
If you ignore or do not notify HMRC/a creditor, this will likely lead to them formally requesting payment. This can be done through 3 formal routes:
- Apply to Court who will issue you with a County/High Court judgement;
- Serving your company with a Statutory Demand;
- Serving your company with a Winding-up Petition.
Any Court judgement, statutory demand or winding-up petition will be served at your company’s registered office address.
The ordinary process for creditors to follow is to initially issue you with a judgement or statutory demand and if it is not dealt with within a certain time frame then a winding-up petition may follow.
However, on occasions, creditors will endeavor to abuse the process and proceed directly to serving a winding-up petition without prior formal notification.
HMRC are more likely to follow these procedures rigorously and will take action if a debt is not dealt with.
HMRC also have the power to levy distraint over goods. This means they can simply turn up at your premises, carry out an inventory of assets on site and prevent you from selling or disposing of them. You will then have a short period of time in which to pay the debt otherwise they will return, uplift the assets and sell them at auction. These assets are often critical to a company’s ability to trade such as plant and machinery or computer equipment, and without these the business simply stops.
If your company has received a Court judgement, statutory demand, winding-up petition or distraint, you will need to react quickly otherwise they can have disastrous effects and, ultimately, lead to the formal closure of your company.